Romanian Govt To Apply Car Pollution Tax Upon First Sale

Romania’s ruling coalition decided to allow the Government to apply a pollution tax upon the first sale of cars brought to Romania before the enforcement of this new car tax system, people familiar with the matter told MEDIAFAX Monday.

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According to the sources, the Government will decide the level of the new tax.

People close to the matter said last week the Government postponed a decision to change the car tax to first draw up an impact analysis and discuss the matter within the ruling coalition.

Speaking after a Cabinet meeting Wednesday, Environment Minister Laszlo Borbely said the "law or ordinance" amending the car tax would be adopted this week. He added his proposition is to apply a tax upon the first sale of the cars brought to Romania before January 1, 2007, in an amount reduced by 20-30%.

The minister said the tax cut would be applied to all cars, to avoid discrimination.

A government document recently obtained by MEDIAFAX showed the Executive was considering charging the pollution tax upon the first sale of cars imported before July 1, 2008, but in an amount reduced by 30%, and refunding part of the tax already paid by owners, in installments over several years, to avoid returning EUR750 million all at once.

Another option considered by the Government was turning the pollution tax into a tax payable yearly by all car owners.

The current car tax system will be changed, following a judgment by the Court of Justice of the European Union, which found the tax in violation of community legislation, as it discourages the sale of used cars from other states to Romania.

The judgment was issued in response to a question by a Romanian court hearing the case of a Romanian national who bought a used car from Germany in July 2008. He paid the pollution tax when registering the car in Romania and complained that it is charged only on imported used cars and not other used cars already registered in the country and then resold.

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